Last week, Lowndes County supervisors and Columbus councilmen showed their support for state legislators repealing the Section 42 housing law.
That law gives developers of federally subsidized, low-income apartment complexes tax credits on construction costs — a 10 percent dollar-for-dollar credit each year for 10 years.
The effort to repeal the law failed; bills introduced in both Mississippi House and Senate committees died before the Feb. 5 deadline for bills to pass. For several years similar bills have failed to pass to rescind the law saying the tax credits should not be considered as income when calculating the apartments’ income for taxation purposes.
According to figures from Lowndes County Tax Assessor Greg Andrews, the new legislation would have meant an additional collection of $131,525 for the Columbus Municipal School District, $242,000 to Lowndes County and Lowndes County School District and $4,089 to the city of Columbus next January.
Rep. Jeff Smith, R-Columbus, filed a bill during the 2013 session to address the issue by achieving a compromise with the Mississippi Association of Supervisors and the Mississippi Municipal Clerks and Tax Assessors Association over the law. Instead, the MAS opted to wait on a state Supreme Court ruling. The ruling not only favored developers but found that counties that have been collecting taxes that should have been given to the developers each year must pay back retroactively. The recent timing of that ruling led to a lack of support in the House’s Ways and Means Committee, which Smith chairs, this session.
Some counties will have to reimburse Section 42 owners more than $1 million, Smith said.
“I tried my best to work this thing out legislatively before the Supreme Court made its ruling,” Smith said. “I don’t think any of us had idea that the Supreme Court was going to go a step further and say taxes collected against the reading of the law, you’ve got to pay back.”
Lowndes County Administrator Ralph Billingsley said after supervisors favored a repeal last week that the valuation approached used by the state allows Section 42 developers an unfair advantage.
“They show no income, so they show no value, so they’re not paying county property taxes,” Billingsley said. “You’ve got these huge developments, whether it’s apartments or whether it’s an individual home, that are out there that are not paying property tax in the counties. It’s some big dollars in some counties. What the MAS is trying to do is get the legislature to repeal that method of the tax appraisal, so they can be taxes like anybody else. They want to level the playing field.”
Smith added MAS was reactive and not proactive by waiting on the Supreme Court’s decision.
“I was anxious and willing to do something in 2012. Every time I would come up with suggestion the supervisors association said, ‘We don’t like that,’ Smith said. “I was afraid this was going to happen and I wished we could have changed this beforehand.”
Nathan Gregory covers city and county government for The Dispatch.
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